KAMAZ and Daimler plan to invest $745 million in Russia within 10 years

Kommersant – KAMAZ and Daimler are ready to invest more than 46 billion rubles (approximately $745 million) within the framework of a Special Investment Contract (SPIC), as told by the deputy head of the press office of the Presidency of Tatarstan: Lilia Galimova at the press conference. Galimova has stated that the SPIC aims to develop the model range of KAMAZ and Mercedes-Benz trucks and modernise the production process of the vehicles. The SPIC will be implemented for the duration of 10 years. KAMAZ will invest 38.6 billion and Daimler KAMAZ Rus 7.7 billion rubles. According to Galimova, the SPIC is planned to be signed during the St. Petersburg International Economic Forum (SIEF-2018) on Friday. Galimova has reminded that KAMAZ and Daimler have been carrying out an investment project on the development of the model range of KAMAZ with a total investment of around 100 billion rubles since 2012. The joint application on the conclusion of the SPIC was filed on 1 September 2017. The inter-departmental commission has approved the application on 16 May.

According to the press office of Tatarstan Presidency data, the implementation of the project will push the annual production capacity to 55-600 trucks in the existing facilities, as well as enabling the production of key components. KAMAZ will continue to develop its model range, create a new family of P-6 engines and organise longeron production within the scope of the project. Daimler KAMAZ Rus will carry out the production of the new Mercedes-Benz trucks at the facility in Naberezhnye Chelny. The companies will localise the cabin carcasses and common parts to be used in the production of trucks of both brands.

As stated previously, KAMAZ and Daimler plan to invest around 100 billion rubles in the joint venture for the production of cabin carcasses for the new model range of the brands (annual capacity of 55,000 cabins, 7000 of which will be supplied to Daimler KAMAZ Rus) and the modernisation of equipment. The cabin carcass plant will commence operations during the first quarter of 2019, according to plans. The plans on the modernisation of the main assembly line of KAMAZ have also been disclosed.

The companies KAMAZ and Daimler have not given any details about the terms of the SPIC. However, the Ministry of Industry and Commerce has singled out one terms of the contract, on export obligations, as essential. As it turned out, KAMAZ had faced difficulties during deliveries to foreign markets against the background of the aggravated political circumstances, despite being outside the sanctions. A relevant statement was made by the head of KAMAZ Sergei Kogogin at the SIEF-2018 on Thursday, highlighting the difficulties faced during financial operations. “The decisions taken by banks on the conduct of financial operations are significantly complicated, including long checking processes. Sometimes the payments stop for very long time and often we can not even get advanced payments” – said the general director adding that the banks in question operate within the SWIFT system. Kogogin has told that the difficulties in payments started in August 2017, when the USA launched the sanctions, affecting Russia. According to Kogogin, complications occur in all export operations, including transactions to CIS countries.

In the meantime, KAMAZ will still go ahead with the plan of the exports of 6100 trucks in 2018. The company also plans to sell 40,000 trucks in the domestic market. The company previously had a more pessimistic forecast for the Russian market, amounting to 43,100 trucks only (6100 for exports). Sergei Kogogin predicts a net profit of 1.6 billion rubles in 2018 according to IFRS, 176 billion rubles revenues and 20 billion rubles of investment programme. The net profit of KAMAZ has grown by 5.3 times in 2017 according to IFRS, to 3.5 billion rubles and the total sales were up by 11%, reaching 38,200 trucks.